Shares of Wal-Mart Stores, Inc. (WMT - Analyst Report) hit a new 52-week high of $75.19 on Aug 18 after the company reported upbeat second-quarter fiscal 2017 results. Shares of this retail giant eventually closed at $74.30.

Strong Q2 Results

The Bentonville, AR-based retailer reported encouraging second-quarter fiscal 2017 results, wherein both earnings and revenues exceeded the Zacks Consensus Estimate. While revenues increased on a year-over-year basis owing to an improvement in comps, earnings witnessed a decline. Though the company reported higher sales at Wal-Mart U.S., a drop in sales at the international business and Sam’s Club resulted in the year-over-year fall in earnings. Unfavorable currency and higher investments in wages and e-commerce activities took a toll on the company’s results.

Nevertheless, Wal-Mart has been making efforts to understand the evolving needs of its customers to regain their confidence, and thus boost sales. It has delivered positive comps in the U.S. in the last eight consecutive quarters. Sam’s Club comps, excluding the impact of fuel sales, also inched up 0.6% in the reported quarter compared with 1.3% growth in the prior-year quarter. Lower fuel prices aided sales by easing consumers’ spending power. E-commerce has also contributed to the company’s comp sales.

Operating income grew 1.6% to $6.17 billion in the second quarter. This includes a gain of $535 million from the sale of Yihaodian. Excluding this gain, consolidated operating income declined 7.2% as the company continued to invest in people and technology. Higher investment in e-commerce initiatives in order to compete with online retailer Amazon.com, Inc. (AMZN - Analyst Report) and in associates through higher wages and training seem to have dampened operating income, along with negative currency.

WAL-MART STORES Price and Consensus

WAL-MART STORES Price and Consensus | WAL-MART STORES Quote

Guidance

The company has updated its fiscal 2017 guidance to reflect the sale of Yihaodian. Wal-Mart now expects its earnings in the range of $4.15−$4.35 per share, up from $4.00−$4.30 estimated earlier. Earnings are, however, anticipated to be lower than $4.57 per share posted in fiscal 2016. The decline in year-over-year growth is due to higher wages and increased spending on e-commerce activities.

The company expects full-year effective tax rate at the low end of the previously stated range of 31.5% to 33.5%.

Wal-Mart currently carries a Zacks Rank #2 (Buy).

Stocks to Consider

Other well positioned retailers include Boot Barn Holdings, Inc. (BOOT -Snapshot Report) and Citi Trends, Inc. (CTRN - Analyst Report) . Both hold the same Zacks Rank as Wal-Mart.